With provisional tax, you'll estimate and pay your taxes in two payments. So one payment every six months, which is contrary to the standard tax system, in which you pay one big amount at the end of the tax year.
It seems simple enough, but problems do arise when calculating provisional tax, because many don't follow all the necessary steps.
So to help you, here's a simple checklist to ensure you calculate provisional tax correctly every time...
You'll be paying a tax penalty of up to R4 000 to SARS on 28 February…
If you haven't submitted your provisional tax return by 28 February 2016, then SARS will add a R4 000 penalty to your tax bill…
Errors mean double penalties – one for the error, and one for not following the rules!
Don't know where to start?
Or how to calculate the tax?
to get your hands on a tell-all guide today! It'll walk you through every step in the provisional tax process, so you'll never put a foot wrong again!
Use this checklist to help calculate your provisional tax correctly every time
Have you calculated your estimated taxable income for the year?
Have you calculated the amount of tax
you'll pay on this taxable income?
. Have you subtracted the annual tax rebate from this amount? (This will give you the total amount that you'll have to pay for the tax year).
. If it's the first provisional tax return you're calculating, have you taken away half of the total tax payable for the tax year, after which you'll be left with the amount due for the first period of the tax year? (If you're calculating the second provisional tax return, you can skip this step).
. Have you subtracted any employee's tax deducted for the tax year? (Only subtract the first six months if you're calculating the first provisional tax return).
Have you subtracted any allowable foreign tax credits for the tax year? (But only if you're completing your first provisional tax return).
. Have you added any outstanding SARS penalties and interest on this amount? (This information will either already be on your provisional tax return, or you can get it from SARS and include it in your tax return).
If it's the second provisional tax return you're calculating, have you made sure you subtract any provisional tax which you paid for the first provisional tax period?
*If you can answer YES to all those questions, then you're on the right track to correctly calculating your provisional tax.
Don't forget to make use of the SARS tax tables when calculating your provisional tax! You can find them in Chapter P 01 in your Practical Tax Loose Leaf Service
handbook. Here, you can also confirm if you really do qualify for provisional tax.
If you don't already have this fantastic tax resource, then click here
to order your copy today.